Reports Made By Africa : Creating Value Through Integration.

Note: The map shows potential providers of inputs that have comparative advantage or an export potential of more than $10 million

Significant intraregional export potential to untap Africa has the potential to export €5.8 billion of cotton garments by 2026. Almost 15% of these exports would be on the African continent. Two-thirds of intraregional export potential in the sector have yet to be unlocked. Despite high exports and export potential, import demand is also high. This is reflected in an import value of €3.6 billion, projected to increase by 84% as of 2026 to €6.6 billion

Africa is on the low steps of this value chain ladder

 

The continent is an important producer and exporter of raw cotton and is involved in the final assembly of certain textiles. However, Africa exports 90% of its raw cotton to Asia and is a net importer of cotton fabrics and yarn. African cotton apparel manufacturers import a mere 7% of cotton yarn and 6% of cotton fabric from elsewhere on the continent. Export potential in cotton garments could increase quite a bit if intermediate steps in the value chain – such as processing of cotton into yarn and fabric – were carried out on the continent. This presents strategic investment opportunities with a view of diversifying production locations and near-shoring close to major markets, e.g. the EU, to reduce the risk of supply-chain disruptions. Twenty-six economies, including 16 LDCs, could competitively export inputs for the cotton apparel value chain. Eleven of these countries, including four LDCs, could also competitively export outputs of the value chain, while two additional countries – Cabo Verde and Kenya – could only competitively export the outputs. 

A need to enhance businesses’ awareness of existing trade agreements and their impacts

 More than 80% of interviewed businesses have not seen or are not aware of any impact of existing trade agreements. Still, about two-thirds are optimistic that a continental trade agreement would boost regional trade in the cotton apparel sector. About 60% of survey respondents in the industry are unaware of the AfCFTA, however, and more than 90% have never participated in any form of consultation on trade deals. The changing dynamics of international value chains in the apparel industry and growing interest in nearshoring put Africa in a strategic position and create opportunities to develop this value chain on the continent. 

Cotton apparel value chain has high job-creation potential 

A study by ITC and the International Labour Organization estimates that fully realizing the export potential of cotton apparel could generate more 200,000 jobs in Egypt and upwards of 50,000 in Tunisia alone. This could especially benefit women, who represent a large part of the workforce in the sector: 73% of interviewed value chain participants across Africa employ more women than men and women lead a quarter of African cotton apparel companies.

 - FIGURES -

Box 1-Promising value chains in ECOWAS and EAC  

Box 2 -Tools to cut the time and cost of product authorizations 

Box 3 - The pharmaceutical initiative for Africa 

Figure 1 Honing in on promising value chains 

Figure 2 Sectors with most promising value chains  

Figure 3 Promising value chains span across the continent 

Figure 4 Consultations with African businesses and stakeholders 

Figure 5 Participants in the web-based consultations 

Figure 6 Expert-led interviews along the pilot value chains 

Figure 7 Participants of NTM Business Surveys in Africa 

Figure 8 Most African trading firms handle export processes themselves 

Figure 9 Firms in the four value chains are well established 

Figure 10 Most business survey participants are small and medium-sized firms 

Figure 11 Locals own most surveyed firms in the pilot value chains 

Figure 12 Few African firms are present outside their home country 

Figure 13 Companies make most sales and revenue locally 

Figure 14 Export-related measures, technical regulations and rules of origin requirements hinder intra-Africa trade 

Figure 15 Half of value chain participants are unaware of AfCFTA  

Figure 16 Most pharma export potential is unrealized  

Figure 17 What do firms say about trade agreements?

Figure 18 Nearly half of the sector’s potential remains unrealized 

Figure 19 Cotton apparel import value to rise 84% by 2026 

Figure 20 Women are still underrepresented in African businesses 

Figure 21 Women along the four pilot value chains 

Figure 22 Women struggle to access finance 

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